Charles Schwab vs. TD Ameritrade: Which Should You Choose?

Charles Schwab vs. TD Ameritrade: Order Types

Both Charles Schwab and TD Ameritrade can handle standard limit, stop loss, stop limit orders, and trailing stops. Advanced and conditional orders such as one-triggers-other, one-cancels-other, and order-triggers-other are available on the StreetSmart Edge and thinkorswim trading platforms. Given the similarities between Schwab and TD Ameritrade when it comes to order types, this category is a draw.

Charles Schwab vs. TD Ameritrade: Trading Technology

Charles Schwab uses proprietary technology to route orders, and it rates highly for obtaining price improvement on 96.6% of orders (for orders of 500 to 1,999 shares) with an average of $0.0192 in savings per share. Execution speed is 0.04 seconds. Schwab receives payment for order flow (PFOF) coming out to roughly $0.00066 per share.  Schwab also provides qualifying customers with portfolio margin, typically up to 50% of the value of their account.

Only Schwab also offers account holders the ability to purchase fractional shares of as little as $5, allowing small investors to participate in ownership of high-priced stocks like Tesla and Amazon, which can trade for more than $1,000 per share. 

TD Ameritrade also benefits from PFOF, collecting $0.001 per share over the period we looked at. It is interesting that TD Ameritrade came in higher, but both Schwab and TD Ameritrade collect much less than firms like Robinhood and Webull. TD Ameritrade customers can route their own equity and options orders to select exchanges. Investors can also benefit from price improvement through TD Ameritrade’s proprietary routing software. Orders routed through TD Ameritrade’s order routing system see price improvement 98% of the time. Orders fill in 0.04 seconds and the average price improvement per share is $0.0132. 

Both TD Ameritrade and Schwab’s trading platforms allow traders to backtest their trading strategies. Neither TD Ameritrade nor Schwab assists customers to achieve higher cash yields or automatically transfers cash balances to high-yield money market accounts.

The trading technology category is also a tie, although smaller investors might benefit from Schwab with access to fractional shares. Similarly, advanced investors will gravitate towards TD Ameritrade’s award-winning thinkorswim trading platform. 

Charles Schwab vs. TD Ameritrade: Costs

As is the norm now, U.S. stocks and ETFs trade commission-free at both investment firms. Schwab offers thousands of no-transaction-fee mutual funds, with commissions up to $74.95 to buy funds that levy commissions. On November 4, 2022, margin rates for up to $24,999 clock in at 12.075% for Schwab customers. TD Ameritrade is more modest, with hundreds of no-transaction-fee mutual funds. Those that do charge commissions range from $49.95 to $74.95 to purchase. TD Ameritrade’s margin rates are more than 1% higher than Schwab’s, at 13.25% for borrowing between $10,000 to $24,999. Heavy margin users might consider seeking out a broker with lower margin rates.

Which broker you will prefer depends upon which products and services you use the most. For mutual fund and margin investors, Schwab is better.

Charles Schwab vs. TD Ameritrade: Account Research Amenities

Both TD Ameritrade and Schwab’s research features are comprehensive and accessible. The Schwab platform offers screeners, proprietary Schwab stock lists, and in-depth stock research tools including third party analyst reports. TD Ameritrade has a unique Bond Wizard as well as screeners for most assets and research reports. The trading platforms on each site offer a wealth of technical and fundamental research and charting tools. Most investors will be content with the research amenities on either site, especially since they will be merged within a year or so.

Charles Schwab vs. TD Ameritrade: Portfolio Analysis

Both TD Ameritrade and Schwab allow aggregation of outside accounts to provide a full financial picture for clients. They both provide excellent tools and calculators for portfolio analysis, including tools for margin, portfolio mix, retirement and income guidance, tax efficiency, life events, and options pricing and probabilities. Rebalancing, benchmarking, internal rate of return, tax impact analysis, and other tax accounting tools are also available. 

TD Ameritrade includes the ability to access the well regarded Morningstar portfolio X Ray analysis tool. Schwab provides the complimentary Schwab PlanTM, a digital financial planning tool to help users meet their retirement goals. We gave a slight edge to Schwab’s offering of tools, calculators, and portfolio analysis even though both companies have strong offerings in this area.

Charles Schwab vs. TD Ameritrade: Education

Schwab and TD Ameritrade both have excellent resources to educate investors and traders. This includes articles, videos, webcasts and in-branch educational events. Schwab won our Best ETF Screeners category while TD Ameritrade took our Best Broker for Investor Education category. The TD Ameritrade Network is a particularly noteworthy offering, with its live and recorded video content spanning markets, investing, and more. TD Ameritrade provides hands-on learning through paper trading in addition to investment education that uses technology to deliver innovative content in a personalized way. TD Ameritrade is the ultimate winner of the best educational offerings of all online brokers.

Charles Schwab vs. TD Ameritrade: Customer Service

Both TD Ameritrade and Schwab provide solid customer service. Unlike most online brokers, both brokers have a wide branch network with offices throughout the United States. TD Ameritrade and Schwab also have 24/7 phone and live chat help options, as well as easy access to financial advisors to assist customers with strategy and trading ideas. Our research found that Schwab’s average wait time on customer service calls is 102 seconds, compared with TD Ameritrade’s 43 seconds—neither of these are very long wait times. That said, TD Ameritrade won our Best Broker for Customer Service with shorter wait times than at Schwab.

Charles Schwab vs. TD Ameritrade: Security

Security on Schwab and TD Ameritrade is largely comparable. Both brokers offer dual-factor identification, biometric fingerprint and facial recognition, and additional loss protection beyond Securities Investor Protection Corporation (SIPC) through insurance policies in London. As a reminder, insurance is provided for broker malfeasance and bankruptcy, not to compensate for normal losses due to investment market volatility. Investors can feel confident in the top-notch security protocols at both TD Ameritrade and Schwab. 

Charles Schwab vs. TD Ameritrade: Account Types

Charles Schwab has a multitude of accounts and services to meet the needs of a new investor or an experienced investor. 

• Individual and joint taxable
• Corporate and business taxable
• Global (access to 12 international markets in local currency)
• Traditional, Roth, inherited, and rollover IRA
• Individual and business IRA and 401(k) 
• Trust
• Custodial and 529 college savings plan
• Charitable

TD Ameritrade offers suitable investment accounts for individuals, families, and business entities.

• Individual and joint taxable
• Corporate and business taxable
• Guardianship or conservatorship
• Traditional, Roth, inherited, and rollover IRA
• Individual and business IRA and 401(k) plans
• Trust
• Specialty including partnerships and investment clubs
• Custodial and 529 college savings plan
• Charitable

The account types at Schwab and TD Ameritrade will suit nearly every type of investor from business to 529 college savings plans. The Account Type category is a draw between Schwab and TD Ameritrade. 

Final Verdict

This is a unique final verdict, as within the next year or so, most of the services at TD Ameritrade will be incorporated into the Schwab brand. That includes merging branch networks and transitioning thinkorswim to Schwab. So, for the next year, whether you choose to open an account at TD Ameritrade or Schwab will depend upon whether specific features at TD Ameritrade are not available at Schwab. 

For active and sophisticated traders who need the best-of-breed trading platform, you’ll likely select TD Ameritrade for access to the thinkorswim platform. Beyond that specific case, we believe that either platform will offer most investors a solid user experience, broad investment assets, sound customer service, and excellent research tools. In our conversations with Schwab and TD Ameritrade representatives, the companies have promised to keep the best features of their respective platforms. The end result of the merger should be a better platform than each investment brokerage currently has on its own.

Frequently Asked Questions (FAQs)

Methodology

Investopedia is dedicated to providing investors with unbiased, comprehensive reviews and ratings of online brokers. Our reviews are the result of months of evaluating all aspects of an online broker’s platform, including the user experience, the quality of trade executions, the products available on its platforms, costs and fees, security, the mobile experience and customer service. We established a rating scale based on our criteria, collecting thousands of data points that we weighed into our star-scoring system.